Diesel

24
NIVESHAK
Article Cover FinLife of the Story Month
in the asset prices is halted at the resistance/
support level. In double top reversal pattern
the asset prices attempt to break the resistance
levels twice after which downward trend in price
movement pushes the prices lower. Similarly
in double bottom reversal pattern prices try to
break down below the support level, however
has sustained in those levels by buying seen at
the support level. After the two bounce-offs the
asset prices starts moving in an upward trend.
Triangle Patterns: There are 3 types of
triangular patterns which are commonly used in
technical analysis. As a triangle pattern is formed
the asset prices breakout into an increasing or
decreasing trend. A symmetrical or an ascending
triangle pattern is a bullish pattern and there is
upward breakdown in such a scenario, however
in a descending pattern breakdown bearish
movement is asset prices is expected.
Leading indicators are those created to proceed
the price movements of a security giving
predictive qualities. The leading indicators will
create many buy and sell signals that make it
better for choppy non-trending markets instead
of trending markets where it is better to have
less entry and exit points. The majority of
leading indicators are oscillators. Oscillators is a
technical analysis tool that is banded between
two extreme values and built with the results
from a trend indicator for discovering short-term
Figure 4: Triangle Patterns
overbought or oversold conditions. As the value
of the oscillator approaches the upper extreme
value the asset is deemed to be overbought,
and as it approaches the lower extreme it is
deemed to be oversold.
Lagging Indicators are those that follows price
movements and has less predictive qualities.
The usefulness of these indicators tends to be
lower during non-trending periods but highly
useful during trending periods. This is due to
the fact that lagging indicators tend to focus
more on the trend and produce fewer buy-andsell
signals. This allows the trader to capture
more of the trend instead of being forced out of
their position based on the volatile nature of the
leading indicators.
Fundamental Analysis: It consists of the
analysis of two factors:
1. Qualitative factors: Various aspects which
look at measures of a company that cannot
be stated numerically but are the key factors
related to the business/commodity are analysed
qualitatively. Companies with intellectual
property and competitive advantage have higher
chances of retaining profits and retaining market
share. Similarly companies with good corporate
governance trade at a premium as it results
in higher transparency and protection to the
shareholders objectives. Capable management
and favourable regulation further boost the
Figure 5: Qualitative Factors
NOVEMBER 2014